What is the difference between an MLM and a pyramid scheme?
In: 92
Not sure why everyone is claiming if you sell a product you’re not a pyramid scheme. MLMs rely on the people they recruit to recruit more people as a source of revenue. The money they make from actually selling products to people besides the people they recruit is minimal.
Not sure why everyone is claiming if you sell a product you’re not a pyramid scheme. MLMs rely on the people they recruit to recruit more people as a source of revenue. The money they make from actually selling products to people besides the people they recruit is minimal.
It is a spectrum. An MLM business makes money in two ways:
A) selling product
B) recruiting new people
If you join the company, and all of your earnings come from “B”, then you are in a pyramid scheme. If all of your earnings come from “A”, you are not in a pyramid scheme, though you are also probably not in an MLM.
The higher the percentage “B” represents of your total income, the more likely it is that you are part of a pyramid scheme. Remember that income from “B” will always become zero eventually, so unless there is enough “A” then there will be a collapse.
I would say that if more than 20% of your income comes from recruitment, it is a pyramid.
It is a spectrum. An MLM business makes money in two ways:
A) selling product
B) recruiting new people
If you join the company, and all of your earnings come from “B”, then you are in a pyramid scheme. If all of your earnings come from “A”, you are not in a pyramid scheme, though you are also probably not in an MLM.
The higher the percentage “B” represents of your total income, the more likely it is that you are part of a pyramid scheme. Remember that income from “B” will always become zero eventually, so unless there is enough “A” then there will be a collapse.
I would say that if more than 20% of your income comes from recruitment, it is a pyramid.
It is a spectrum. An MLM business makes money in two ways:
A) selling product
B) recruiting new people
If you join the company, and all of your earnings come from “B”, then you are in a pyramid scheme. If all of your earnings come from “A”, you are not in a pyramid scheme, though you are also probably not in an MLM.
The higher the percentage “B” represents of your total income, the more likely it is that you are part of a pyramid scheme. Remember that income from “B” will always become zero eventually, so unless there is enough “A” then there will be a collapse.
I would say that if more than 20% of your income comes from recruitment, it is a pyramid.
MLM = pyramid scheme.
[a great source for figuring out if it’s a pyramid scheme](https://youtu.be/lC5lsemxaJo)
An MLM has ( or should have ) a contract you sign up front. The mechanism is spelled out right there. A pyramid scheme is fraud from jump street. The perpetrator is misrepresenting where your money is going.
MLM = pyramid scheme.
[a great source for figuring out if it’s a pyramid scheme](https://youtu.be/lC5lsemxaJo)
MLM = pyramid scheme.
[a great source for figuring out if it’s a pyramid scheme](https://youtu.be/lC5lsemxaJo)
An MLM has ( or should have ) a contract you sign up front. The mechanism is spelled out right there. A pyramid scheme is fraud from jump street. The perpetrator is misrepresenting where your money is going.
Latest Answers